Claim settlement is one of the most important parts of any insurance policy. Being able to make a claim and get compensation against the same is the whole point of buying insurance. Up until now, regardless of whether it’s motor insurance, health insurance, travel or home insurance, the claim amount was almost always paid off in one go. However, this could change in the future and customers could soon have as many as 3 compensation options to choose from.
Why is this so?
This is because the IRDAI is toying with the idea of providing installment-based claim settlement for Personal Accident Cover in third party bike insurance/four wheeler insurance & Benefit-based Health Insurance plans. Keeping with this, the regulatory body set up a panel to examine the plausibility of the same.
What were the findings of the panel?
The panel, which was set up somewhere last year, evaluated all the possibilities under such a move and submitted its findings earlier this year in January. It is believed that the panel baked the installment-based mode of claim settlement.
What is the way ahead?
Following the panel’s findings, the IRDAI drafted a rough set of guidelines regarding installment-based claim settlements. This draft has been given to all the insurance stakeholders (including general insurance companies) for comments and feedback.
What will be my options if the draft is approved?
Of course, the original lump sum payout option stays. However, if the draft is passed, you could also choose to receive the payments in installments. A third option would also be available and would be of lump sum payment and installments. Under this option, the policyholder would be able to claim a percentage of the sum assured at the start and then receive the rest in installments over a period of time.
How long will the installments last?
As per the current draft, the installments will be spread across a period of 5 years. However, this is just a draft, based on the comments and feedback of all the general insurance companies and other stakeholders, this period could increase or decrease.
When do I get to select my mode of claim settlement?
If the draft is passed, customers can choose their mode of claim settlement at various stages of their online insurance policy, i.e. when you buy the policy, at any stage of the policy term, upon renewal and even when making the claim.
Finally, what is the benefit is this move?
Right, so offering installment-based claim settlements ensures the compensation can help the policyholders over 5 years instead of being just a flash in the pan after the incident. The new options also add flexibility to the claim settlement process and allow policyholders to choose payouts that match their needs at the time of the claim.
We hope this article has made for an informative read and has given you a brief yet thorough understanding of this new mode of claim-settlement. Note that all the above information is based on the rough draft published by the IRDAI; the actual norms could change with the comments, feedback, and suggestions from the general insurance companies and other stakeholders.